 Do monetary condition news at the zero lower bound influence households’ expectations and readiness to spend?Jeffrey Sheen and Ben Zhe Wang European Economic Review, 2023, vol. 152, issue C Abstract: We investigate how households update their interest rate and inflation expectations upon hearing monetary condition news, and to what extent this changes their readiness to spend. Using data from the Michigan Survey of Consumers from December 2008 to December 2015, we find (1) the likelihood of higher expected interest rates significantly increases upon hearing news of tighter monetary condition; (2) monetary condition news is irrelevant for both short- and medium-run inflation expectations; (3) the main information content of this perceived news is most likely from forward guidance and professional forecasts; and (4) households update their readiness to spend on houses, cars and durable goods upon perceiving monetary condition news. Our evidence points towards interest rate expectations as the most likely mediator through which monetary condition news drives households’ readiness to spend. Keywords: News impact; Monetary condition news; Interest rate expectations; Inflation expectations; Readiness to spend; Purchasing intentions (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:152:y:2023:i:c:s0014292122002252 DOI: 10.1016/j.euroecorev.2022.104345 Access Statistics for this article European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer More articles in European Economic Review from Elsevier |
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